Malaysian Palm Oil – Where are we heading?

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Palm oil is a key commodity and can be found in various products from food to bio-fuel. Its versatility makes it valuable to many industries and its economic benefits make it attractive to many companies and governments. Malaysia and Indonesia may be the main producers of palm oil, but increasingly, oil palm plantations are  being cultivated in certain parts of Thailand, Africa, Latin America and Pacific islands.

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The Malaysian government recognises the need to increase the nation’s productivity hence palm oil production was included in the Economic Transformation Programme. The government’s goal is to raise the industry’s GNI contribution from a current RM52.7 billion to RM178.0 billion by 2020. Some of these include improving yields, increasing the oil extraction rate and improving worker productivity.

The boom in palm oil has attracted many criticisms, mainly on the destruction of the environment and biodiversity. Social issues such as land conflict and workers rights are also beginning to plague oil palm companies. There is a shift in the way the oil palm industry is developing and the time is now to start thinking about how to go about incorporating sustainability in oil palm plantations. A key driver is the trend where, globally, international buyers are imposing stricter rules on the palm oil export with the Dutch and Belgian governments pledging to use only sustainable palm oil by 2015. Even corporate buyers such as Unilever, Johnson & Johnson and Nestlé have also pledged to use only sustainable palm oil.

Oil palm cultivation has existed in Malaysia for more than 100 years. However, the concept of sustainability, unfortunately, is still a new term for many and is complex to grasp let alone to implement. Infact, based on our experience on the ground, we have seen how companies require guidance and support in understanding and implementing measures as required by international standards. We believe that first and foremost, an understanding of social and environmental issues is fundamental to developing new models for agribusiness.”

Hence, Wild Asia recognizes the need to directly influence and support palm oil producers to address sustainability gaps. By establishing the Technical Support Programme, they seek to implement solutions to promote sustainability across the entire oil palm supply chain by providing advisory support and training.

Supporting the underdogs

A significant contributor to the nation’s palm oil production is the independent smallholders who are largely unsupported and often left behind in the drive towards sustainability. In a move to support small farmers in palm oil, Wild Asia established the Wild Asia Group Scheme (WAGS) to address the challenges faced by independent smallholders by helping them improve their farming practices and supporting them towards compliance with international standards. WAGS is a community development initiative that would provide the working model for independent smallholders to ultimately improve their livelihoods by improving yields, having lower environment or social risks and ensuring access to the international market of sustainable palm oil.

Eventually, sustainable palm oil production will have to be the norm. Yet the reality on the ground is far from achieving this. In Malaysia, 3.5 million tonnes of crude palm oil are certified as sustainable as opposed to 18 million tonnes produced. Malaysia palm oil has a long way to go towards sustainable palm oil production. A study by WWF has found that sustainable practices contribute to profitability, at the same time mitigate impacts on the environment and people. For the Malaysian palm oil sector to be competitive in the market, sustainability should be the main driver towards achieving the government’s palm oil targets.

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Dr. Reza Azmi is Executive Director of Wild Asia (www.wildasia.org)

 
Photo Credit: Partridge Road via Compfight cc

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